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tv   Street Signs  CNBC  November 5, 2019 4:00am-5:00am EST

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of datinele. i'm craig melvin. thank you for watching. [music playing] i'm joumanna bercetche and these are your headlines ahead of a signing of a phase one trade deal on u.s. soil. the nikkei surges amid of trade optimism but the rally faulters as corporate earnings share.
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shares of pandora sinks and hugo boss predicts recovery next quarter. former british prime minister tony blair tells us exclusively brexit will happen. >> everyone's politics is weird right now. everywhere you go in the world and leaders start talking, you get into a competition of whose politics are crazier a lot of people are competing to catch up with us >> welcome to "street signs. chinese president xi jinping has called for the world to stand firm against protectionism and standing firm to protect his
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country's environment. calling for more open trade while not mentioning the united states by name amid multiple reports the u.s. is considering chinese demands for tariffs to be halted amid a compromise of a phase one trade deal >> president xi jinping is hammering home a message that chinese consumer is critical in his speech this morning, he pledged china's door would only open more. >> translator: of the problems confronting the world economy, none can be resolved by a single country alone. we must all put the good of the common humanity first. you must have a more open mindset and take more open steps and work together to make the pie of the global market even
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bigger >> new foreign investment law launches, further lowering tariffs and about trade barriers, we should break the wall instead of building one president xi's speech is being criticized in the ongoing trade negotiations, washington has struggled to get beijing to open its markets. french president macron is here but most other countries are sending lower delegations. president xi addressed what has been dubbed as promise fatigue saying, china kept its promises. what we say counts >> when looking at global markets, let's look at some price action yesterday on wall street, we saw
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record highs for all three majors meeting fresh all-time highs energy leading with its best day in seven weeks yesterday we saw that positive momentum in asian markets. nikkei at a 13-month high, up 7% the move is more subdued in europe the stoxx 600 is around the flat line, not having done much if you look at the heat map, it's pretty much 50/50 between red and green. we are very much focused on some of the corporate stories et cete especially those with the out look in the for seeable futures. let's talk about the breakdown among the individual indices here starting in europe. ftse 100 is up relative and maybe because we have seen a bit of a drop in the
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pound down around 128-80 almost down around a point from where we were yesterday. the dax up the ftse mib is the relative outperformer green but perhaps not as positive as the sessions we had in asia and wall street. how about sectors? breaking it down, we have got oil and gas up .8. energy in the u.s. was one of the best performing sectors yesterday. the best session for seven weeks. we have banks and chemicals in europe performing quite well those are cyclical names right at the bottom, we've got defenses and utilities down around half a percentage point i want to take you to movements
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we've had in the yuan. we've broken through a level and spoke about the ramifications on global markets it looks as though the chinese currency has been strengthening in line and the optimism as we head to the phase one talks between china and u.s. certainly, there is a lot of weight between the two sides there. we have an fx expert with me from ing great to have you with us. quick thoughts only this move. broken through seven, a psychological level for the street do you think this has been a
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quid pro quo for china and u.s.? >> i think the market was prepared that donald trump wouldn't extend new tariffs perhaps in december. some of those existing tariffs might be rescinded i think that is a positive move this morning >> certainly, there seems to be good momentum there. viewers watching are thinking, all right, there's a possibility of maybe phase one being signed. what do you buy? which currencies do you buy? where is there still some room >> if you look back at the last 18 months or so, last year, in u.s. and argentina there was a trade truce. that all broke down. the yielding markets trading
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very well. we can see strong core relation. the rand had its own issues at home the rub or the latin american countries. if one thought there was something more than a phase one deal >> why has the dollar done so badly. we had a very strong start to the year recently its paired back some of those gains. >> you are saying it has done so badly. but we've been in an uptrend over the last few years. you are right, it is lower because the u.s. activity data is lower the fed has cut three times. linking to your story about better news out of china
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the whole reason the dollar had done so well this year was because the rest of the world was so poor with the trade war people will be looking for value opportunities elsewhere. in asia, we've seen asian currency i thinks that probably the story. >> do you think that trend continues for a while given the optimism and the fact that the feds have turned kind of neutral at this point? do you think that is a good set up >> perhaps two weeks until we see that phase probably see how the mood develops after that phase one. maybe in donald trump's mind ahead of the election to park that issue we'll have to see how things develop into december. but the optimist will say if
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trade is on hold, the fed is cut. we've got some cheap assets out there. i think the market will be looking for those opportunities. >> you say over the next couple of weeks or so where do you see the dollar headed more medium, long term >> we see by the end of next year, we are not too sure over the next six months or so. particularly things like the yen and the euro the euro dollar might be surging through 112. europe has been under a lot of pressure but it isn't the reason is, that yield differential is still pretty wide if you are a european bond investor and going overseas, it's too expensive to health dollar assets. >> it is pretty interesting. we'll talk about that more in our next chat.
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chris turner from ing. if you want to get involved in the conversation we've been talking a lot about fx, tweet us at @cnbc or tweet me directly. >> more from the exclusive interview coming up in moments (vo) the flock blindly falls into formation. flying south for the winter. they never stray from their predetermined path. but this season, a more thrilling journey is calling. defy the laws of human nature. at the season of audi sales event.
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welcome back to the show, huawei's chairman g everyone o ping said it was an opportunity for tech companies and engineers to work with the network. >> the internet show us that app developers typically guide the line share of profit and their
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income creates most. this is a huge market with trillions of u.s. dollars. the biggest arena will be our partners >> that was the chairman from huawei karen joins us live. huawei is a company under a lot of scrutiny worldwide but it seems like they still have a big stage so to speak in europe. >> of course they do what you've got from that comment is the competition across the eco system from the phones, the chips, the software down to the equipment supplied by huawei and competitors to some of the operators in this space. there is a lot of competition for content going on those devices.
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every part of the eco system is in competition yesterday, i caught up with verizon. it has gone live with super fast speeds to some cities. that said, there is still a lag time right out until 2021 when they expect to see theimpact o the revenue. what you've heard so far from equipment makers is that there will be a whole bunch of services that was not really coming through. what was coming through was increased usage that customers will see the benefits of utilizing the network. when you think about the retail customer tharks will come through the content. you may recallrecently, verizo announced it would give away disney plus streaming to some existing and new customers which
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promised the question, is this the right move because you are giving away content for free or is it a big thing to build subscriber numbers take a listen to what he had to say. >> there was independent research that said more than 60% of homes in america would is subscribe for a disney service we are using an opportunity for 100 million consumer customers to act as a distribution of choice to bring more value to our customers and also introduce them to things in our term that they could choose to pay we did a similar deal with apple. in some of our plans, apple music comes for free in other number of plans, we got a number of months for free. those people who played music either traded up to a higher
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plan or rolled over to a subscription model it allows us to use our scale to bring more value and choice to consumers. >> industry consumers note the high cost of consent in the united states. that's been a motivating factor to force more cord cutting where is the end game? >> i think two things, verizon has a clear strategy here. we are not looking to be a content only what we are doing is using the fact because we are switzerland because we don't own our own content to be a distranscribeib our own choice that's why disney chose us making sure we create choices, we can ensure that they get the
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best possible value out of their relationship with verizon. ultimately, there will be some elements of bundling to allow people to get more of what they want sometimes in a bundle, you are forced to pick the second best package with the best connectivity with verizon, there is never a compromise that's the philosophy we'll a d adopt going forward. >> what that conversation is telling you is that distributors want to aggregate. all of these new streaming services are coming and they'll be through a new operator or a distributor. there is more tension in the pricing power that screaming service has.
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with disney, this is one of the winners in the space they have about thousands of series and then on apple tv, you have the new morning show with jennifer aniston talking about the content and how much they have in the pipeline we'll be in a similar situation. looking to consolidate all of these services you can access netflix through the sky platform so when disney comes to the uk, how much more of a competitor will that be lots more conversations coming up we'll talk about the investor
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landscape with steve schwartzman, founder and ceo of blackstone technology coming to the mix with those very heady valuations so stay tuned across the course. >> we'll be back with you in a couple hours time, karen for more of their coverage, head on line to boris johnson's conservatives have a 13-point lead above the labor party speaking to wilford frost, he said this will be a complex campaign >> the problem you've got, once you muddle out the brexit
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question with who governs the country, the risk is you get a very complicated political situation. you have some people that have very anti-brexit and others very pro-brexit but want to vote for a labor government it is a very sensitive thing to do if boris johnson wins a majority, do you accept he has a mandate. you may end up in their situation where he wins the majority with 40% to even less than 40% of your vote. of course he'll claim a mandate. >> you disagree he'll have a mandate following the referendum 2017 election?
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>> frankly, it doesn't matter if i think it or not. he will claim the mandate for it people argue, well people argue and if he wins the majority, brexit will happen >> what is the realistic path to remain >> where you don't get a conclusive result. say the conservatives are the largest party and stieded to resolve brexit on its own terms. the problem you've got that is difficult to explain but necessary to understand to get into the issue of why brexit is so difficult the two negatiotiations are the terms of exit, which include the irish border issue then we have a further negotiation that will run until the end of next year, which is
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about britain's future relationship that's also going to be a difficult discussion with exactly the same dilemmas over the irish border >> don't miss more of that interview at 16:30 cet i want to go back to the global head of strategy at ing. what do you think the most market friendly outcome would be at this point for the pound? >> the trick here is that tony blair was mentioning there probably, several stages trailing over the next five weeks. i'm guessing maybe a conservative majority that can get johnson's withdraw agreement by the end of january might be positive in the short term i'm talking into that window
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towards the end of january tony blair has mentioned and then what. the uk leaving or northern ireland leaving the customs union, and what happens then over this three-month period, this large tory majority might be a lot all parties will have to make their case over the next five weeks. >> i want to talk a little about europe something has really caught my attention in your notes. you mention the out performance of eastern european countries in this environment we are talking about the brexit risks. you would think these would be more susceptible why not? >> we have put out a new report looking at the remarkable resilience of eastern europe
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actually growth rates are pretty strong they are over 3% year on year. you would have thought eastern europe would have been seen as manufacturing, kind of industrial model it's so much more broader than that they've diversified a lot into services they've been growing in trend over the last three years. unemployment is low, consumption is really strong those higher growth rates, we are not seeing those rate cuts in europe. some they are keeping the currency relatively big. out performance is the story >> what are your top picks there? >> there are good stories going on the rubal. the currency is out performing
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itself the hungarian market can weaken. overall, it is a positive macroenvironment that's the core message from this report. >> thank you for giving us a lot. talking about the fx outlook for next year. coming up, shares in pandora sink to the bottom of the stoxx 600. we'll explain why in j university a few moments robinhood believes now is the time to do money.
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. welcome to "street signs." i'm joumanna bercetche these are your headlines china's yuan hits a high as reports suggest the white house is considering a compromise of a phase one trade deal the nikkei surges amid trade optimism but the rally faulters as corporate sales earnings
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fall the right hailing giant reports a loss of nearly $1 billion. >> we haven't finalized our planning it is going to take a lot of hard work from a lot of folks. we are actually targeting 2021 for adjusted profitability full year former british prime minister tells cnbc brexit will happen if they win the uk election in a strange time for politics >> everyone's politics are weird right now. when leaders talk, you get into a competition whose politics are crazier. i always say i think we are ahead. a lot of people are competing to catch up with us
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it is usually the sign the uk data is coming out. this says 50 flat versus 49.5 in september. no doubt positive news especially as there has been so much political turmoil in the background services has been one sector in the uk that has held up relatively well. a slight improvement from where we were back in september which is neither contractionry or expandry the pound is trading around 1.2880 a tad weaker from where we were yesterday in trading about 70 pips or so let's talk about the broader
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market seeing a positive mood in europe perhaps not as positive as we saw for the other equities ftse 100 in the uk shy of 7,400. in the cac in france just above the flat line. there is some green but not as positive as other markets we had. switching to foreign exchange, we had the euro trading about side was at 1.1130, we've got dollar/yen with some weakness in line with the assets we've seen overnight. some of the safe haven currencies like the yen and swiss frank are coming under
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pressure all three markets in u.s. are at a high all pointing to open in the green. s&p, eight points higher dow jones about 60 points higher yesterday was a solid day for energy in the u.s. year to date, we have the tech sector outperforming and actually up about 37% year to date still very, very strong gains in that particular part of the u.s. market obviously all eyes have been on the earnings that have come out. so far, it has been a good earning season top story today, chinese president xi jinping has met with carry lam after another week of violence according to chinese state media, she expressed support of
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lam. pandora reported an unexpected loss and cut its sales forecast amid key markets specifically in hong kong. anti-government protests have led to a 50% drop in the region. it expects the slump to continue it is being, quote, prudent in closing the stores in order to protect the safety of staff members and adding that hong kong was only 2% of global sales. investors are not liking those numbers today. net profit at hugo boss fell amid the third quarter disappointing earnings come after the fashion group cut earnings last month. they hope for revenue to pick up on the back of strong momentum in china
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a lot of expose your for these two companies. >> switching to banks. due to report interrupt results today on the back of the earnings and the rate environment. european banks are very deep bringing in the head of fixed income we are waiting for san paolo results. it seems in italy, there is almost a two tier system you have the two at the top and the other smaller banks. what does that mean for the italian banking landscape? does that mean the bigger two get to keep a bigger part of the market share >> of course, they are doing really well. they found their space they are able to focus on the
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best clients the rest of the system is well managed. done a decent job, certainly lacks the scale to compete with these two. one of the expectations is seeing consolidation we want to understand what is going to happen. it is going to be ubi with ubs a lot of uncertainty there >> you see the necessity they do it or they are going to struggle i hope they will be able to do it for the first two banks, the picture is clear, they found their own space. they are making a decent amount of money it is a much more bullish picture there. >> being looing at t looking at
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banks, how sensitive are they now? >> they are very sensitive they have said they are both going to go to zero over the next three to five years last quarter, 140 business points of tightening we do expect to see good third quarter data on the back >> are they still holding btbs in their rule book >> they do both on their own balance sheet, maybe on insurance business they do obviously in this quarter, it's going to be a very good support for the results. i think that the exposure is going to be less of an issue for italian banks going forward. we do see italian banks part of
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our global bullish trend it used to be a bullish business and then it became a disastrous business i've seen the banking system morphing to a different object now i see something very exciting. >> they are not only strong and stable, they are morphing into tech business. you see a lot of young people joining the tech business. that is kind of refreshing i want to ask you as well, teltro, how does the latest round stand to benefit and clearly the terms are favorable.
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does that render support that will help them refinance the business it is going to move the expiry everybody, you don't see a lot of bullishness of this nobody wants to rely too many. certainly it is going to be the sector >> banks are up 30%. why have banks done so well. >> in the last month and a half they've done very well we realized it wasn't enough
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banks rebounded on the back of it up 20% today's prices are the same for the banking index we saw in 1992 and in 1987. banks are still there. >> this is my question, we've rallied 20%? >> it is just the beginning. we have a massive investment opportunity for the next decade. it is going to be tough in the beginning. we see the reporting system. we still have bad news some banks are doing a lot of restructuring. it is not going to be easy for people committing money today it will be very good return >> it seems the only thing you are worried about is if the market starts pricing. it is literally tracking one for one. if the market thinks lagarde is going to track one to one, as
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long as you are in this environment, you see the upside. >> the notion that lagarde will push into the territory. i'm a bit skeptic. there is little appetite left for policymakers and further rates. we saw discussions in europe and sweden basically, the problem is they are not working. central banks can do all this stuff. lagarde can do more in terms of going out and meeting politicians and explain they have to find a way to do more. >> we have eight years to discuss it you'll be back on the show and talk about what lagarde is doing. we've talked about banks now if you have any views on european banks or u.s. banks
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tweet us @street ins cnbc or @cnbc jou coming up, more on the target date for uber. when we return the game doesn't end after that insane buzzer beater.
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>> welcome back. germany has increased subsidies by half. the decision comes after meeting chancellor and the release of a new electric vehicle by volkswagen the ceo of the electric scooter company said he is seeing fast moving global trends as more city commuters go electric >> on what you call the whole urban mobility trend people are looking at their alternative way to commute in
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the city we are seeing the trend in scooters and moped, it is cleaner and even from energy efficient, more energy efficient. >> also speaking with cnbc, saying the industry would be worth 800 billion per year >> market is enormous. it's really hard to say what it means to the competition they are already the largest player by far. we are looking at a industry that anticipated to being 300 billion. i think the market opportunity will have a lot of room for a lot of players >> uber shares dropped more than
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5% after the ride hailing company posted a third quarter loss analysts at the top and bottom lines with revenue jumping 30% uber is spending heavily on uber eats and self-driving cars but the ceo said the company will be property by the end of 2021 >> it was a very significant beat on the top line in terms of revenue growth accelerating and the bottom line. we increased our 2019, the midpoint as it goes to 250 million. i'll tell you while we haven't finalized our planning it is going to take a lot of hard work from a lot of folks. we are targeting 2021 for adjusted profitability for a
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full year. >> i want to bring in the analysts great to have you with us. i want to point out that your company is one of the only that had a sell rating for uber at the time of the ipo. so good call is there anything you heard in yesterday's announcements that changes your view? >> the company is promising to get the property but not telling you how to get there in all my years, there is a trade off between growth and profitability. in this quarter, you saw user growth slowing it is clear that if they don't want to continue what they saw wants to get to profitability, they are going to have to sacrifice the growth >> yet things are growing in the
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right direction. now, they are looking at $1 billion. they've said a lot of losses are on the back of the vesting in order to get to profitability, would you assume they wouldn't cut down a little bit and that trade off but the market wants to see profitability. what that told you is that would be behind uber and now it will open as a $29 stock. they are still telling you to buy it on thursday, the lock up expires. so you'll go from about $200 billion shares to about $1.7 billion these are all at the adjusted level. these are not real reflections of what is going on in the
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business they are massage numbers wall street uses but want to present as somehow going to be profitable in the future >> i think it is really significant. reading as much as 1.7 billion shares become eligible for sale tomorrow at 90 percent of outstanding stock. how much pressure does that give >> people are currently materially underwater.
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the numbers were mostly boosted by price increases uber eats is also their least profitable >> of their total revenues, uber eats continues to be loss making is it worth keeping? is it worth to continue vesting in that part of the business given that growth is slowing down >> uber's whole pitch was, we are going to be disciplined and cautious and restrict our investments where we can't be number one or two. the problem with that is again, it restricts the overall growth that the valuation of the company was built on the other problem with eats is they are competing with irrational competitors in the u.s., you have doordash,
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grubhub, post mates. they are all just burning cash i also believe the ride sharing business is only in a temporary period of rational behavior. as uber loses more market, they will have to react with more promotions >> last week, lyft said they were planning to return to profitability by fourth quarter of 2021. uber came back and said, for all of 2021, we are expecting profitabilities. >> businesses tend to plan longer term but i don't see the idea that you have the permanent stable duopoly you look at the london market, uber would have the ride share
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itself you see captain and others come into the market. uber has a two-month license with tfl, which is a huge risk for the markets and certainly a profitable one >> i want to broaden this out a little bit there have been high profiles. many of these companies are actually loss making does that mean so long as a company is not profitable, it is not a buy? is it that basic >> it should be a far greater degree of skepticism for all of these high-profile investment banks. they've done it time and again uber and lyft are the latest examples you've had the banks lined up to
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bring wework to the market that's been a big wake-up call all of these investment banks still telling you to buy uber today are telling you the client for them is the company, not the investor >> there is always the one amazon you are going to miss amazon was loss making for years. >> it was and it was also a company that had a much lower market cap for many years. it took a long time for those businesses to season themselves. what you find now is much younger, less experienced businesses coming to market and burning cash at a greater rate that amazon ever did >> we'll have to leave it there. thank you for the chat on uber and the tech sector. senior analyst, one of the only houses out there with a negative rate being, sell rating on uber when it came out a couple of
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months ago >> a look at the three futures it looks as though we are going to continue with that today. s&p, dow, nasdaq all higher. dow to the tune of 56 points void by a lot of optimism about potential talks between u.s. and china. opec expects oil supplies to fall over the years ahead of the new world oil outlook. we'll be speaking to the secretary-general later this morning. that is it for today's show. i'm joumanna bercetche "worldwide exchange" is coming up next. (vo) the flock blindly falls into formation. flying south for the winter. they never stray from their predetermined path. but this season, a more thrilling journey is calling.
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it is 5:00 at cnbc global headquarters here is your five at 5k. the dow, s&p and nasdaq closing at record highs and looking to add more today china pushed the u.s. to drop some tariffs ahead of a potential trade deal we'll have details there uber shares are dropping after the company reports a more than $1 billion quarterly loss tony blair sits down to talk brexit we'll bring you al


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